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Leominster, casino firm reach $38M slots deal

By Jack Minch, jminch@sentinelandenterprise.com

Updated:
07/19/2013 03:01:12 PM EDT

LEOMINSTER -- Mayor Dean Mazzarella reached a host-community agreement Thursday with a casino developer that guarantees the city at least $38 million over 10 years if the state Gaming Commission issues a license to open a proposed $200 million slot parlor on Jungle Road.

Tax relief is the primary goal of the financial windfall for Leominster, Mazzarella said.

The agreement provides a minimum $3.8 million in yearly payments to the city but is based on a minimum 2 percent gross gaming revenues, which are projected to be worth about $4 million in the first years of the deal, Mazzarella said during a press conference at LATV Thursday.

"If they do better and the percentages are higher, we do better," he said.

After 10 years the city will get 2.5 percent of gross revenues, so if developer The Cordish Cos. can expand its revenues to $250 million the city would rake in $5 million annually, said Jonathan Silverstein, an attorney for City Solicitor Kopelman & Paige.

Payments can be adjusted after five and 10 years.

Cordish released a statement touting the site of the proposed casino with easy access to I-190 and Route 117.

"The Cordish Companies is very excited to have officially signed a host agreement with the City of Leominster," the statement said. "We look forward to working with Mayor Mazzarella and the whole community to create a $200 million casino entertainment destination, which will generate more than 1,000 new jobs and contribute millions of dollars in local and state tax revenue.

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At-large City Councilor Claire Freda was the only elected official to attend the announcement and was pleased with the figures floated by Mazzarella.

"I certainly think it was a pleasant surprise to see an excess of $2 million and additional revenues," Freda said. "I think the negotiating team has done a great job to get the terms."

Now it's up to residents to ask questions, learn about the proposal and vote, Freda said.

Mayor Dean Mazzarella, left, joins Jonathan Silverstein, an attorney for City Solicitor Kopelman & Paige, on Leominster Access Television Thursday morning as he details the city's host-community agreement with the Cordish Cos. for its proposed slots casino on Jungle Road. See a video at sentinelandenterprise.com. SENTINEL & ENTERPRISE / JOHN LOVE

The value of the package was not surprising, said Council President Susan Chalifoux Zephir, a presumed candidate for mayor.

The Cordish Cos. had little negotiating leverage considering the tight timeline, she said.

The money will be a welcome windfall if the casino can generate that much, Zephir said.

"We can find ways to certainly use that, but it will be interesting to see if the facility can actually generate that kind of revenue," she said.

The city can use the money to alleviate pressures on property taxes, but there are other uses as well, Mazzarella said.

It can be used for renovations to the Lancaster Street police station and fill the personnel rolls for the Police, Fire and Public Works departments, he said.

He also envisions it being used for road and sidewalk work as well as developing an early childhood center and paying down the city's debts.

PPE is required to include a police substation in the casino and set aside space for advertising businesses around the region, Mazzarella said.

There are five companies vying for a single Category 2 slots machine casino in the state. They are proposing them in Leominster, Tewksbury, Millbury, Raynham and Plainville.

The state Gaming Commission wants all applications by Oct. 4, but developers can't submit their completed applications without their host community approving it in a referendum vote.

"The people of Leominster have to vote to allow that application to take place," Silverstein said.

Leominster has 60-90 days to schedule a referendum vote as of Thursday. Councilors have said they will schedule the vote before the Oct. 4 deadline.

The Cordish Cos. subsidiary PPE Casino Resorts MA LLC is proposing to build a 125,000-square-foot gaming facility with 1,250 slot machines and electronic games on about 16 acres along Jungle Road.

The gaming commission is requiring the facility cost at least $125 million but PPE and its parent The Cordish Companies plans to spend $175 million. The gaming license costs an additional $25 million.

The Cordish Cos. has built and developed a few casinos including the Seminole Hard Rock Hotel & Casino in Tampa and Hollywood, Fla.

Its flagship casino is Maryland Live! Casino in Hanover, Md., which opened in June 2012.

The Cordish Cos. will owe the city $250,000 payment to the city even before construction begins.

PPE, which is building the project, is responsible for all permitting fees and costs that are expected to be $600,000 to $800,000.

The company will also be required to pay for public infrastructure improvements such as water or sewer lines and roadways that the Planning Board requires.

Rather than bank the agreement on strictly a percentage of the casino's profits, Mazzarella built in a minimum $3.8 million in yearly payments as a safety net against the possibility the casino's popularity could wane or competition could move into the area, such as in Southern New Hampshire, Mazzarella said.

"That is something we felt strongly about," he said. "We didn't want to be spinning the roulette wheel, no pun intended."

The $3.8 million includes $2.7 million in yearly community benefit payments, $1 million in property taxes and a $100,000 impact fee.

If the property taxes are higher or lower than $1 million the community benefit payments will be raised or lowered to keep the payments steady, according to the signed agreement.

The gaming company will make $50,000 yearly payments to the Leominster Community Foundation to support local charities and youth sports as well as a micro-loan program for small businesses.

Company vehicles will have to be registered in Leominster so the city gets the excise taxes, Mazzarella said.

The construction project is expected to create about 600 jobs and then the casino is expected to hire 500-700 full-time workers.

The company is required under terms of its agreement to give hiring preference to Leominster residents and to union members for the construction jobs.

The gaming company is expected to buy $25 million worth of goods and services from local vendors yearly, Mazzarella said.

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